Estates—inheritance tax

Introduction to IHT

For a quick guide to the basics of the inheritance tax (IHT) regime and a broad overview of UK tax rates, exemptions, basic nil rate band (NRB), residence nil rate band (RNRB), transferable NRB and RNRB, agricultural property relief (APR), business property relief (BPR), the reduced 36% tax rate for estates which include at least 10% gifts to charity, the territorial scope of IHT domicile (general, deemed and elected), restrictions on deducting loans and debt, lifetime gifts, small gifts relief, the use of trusts and compliance procedures, see Practice Note: Introductory guide to IHT.

See also Practice Note: Case study—IHT calculation on death.

The charge on death

The IHT charge on death falls under two headings:

1. •

   the additional charge—which arises on the chargeable lifetime transfers and the potentially exempt transfers (PETs) made in the seven years before death, and

2. •

   the estate charge—which arises on the value of all the property the deceased owns (or is deemed to own) immediately before death

The calculation and apportionment of IHT due on death can be complex, especially taking account of trust interests, chargeable